Our New (Used) Car

Previously on Dad is Cheap…
In a previous post I mentioned what I would do when I purchased a new car:

“When the day comes that Handy needs to be replaced, I’ll most likely get a slightly used car from a site like Auto Trader or Craigslist and pay cash for it.”

One horrible incident slightly changed that perspective.

While I did look at Auto Trader and Craigslist for a bit, we ended up purchasing a certified used Camry that only had about 6,000 miles from a Toyota dealership. After what happened, I didn’t have the energy or time to fully research getting a used car from a private party like I originally wanted.

I was also about to start my new job, so I didn’t want the extra stress of coordinating meet ups with strangers to find that perfect used car. We just wanted something that worked and had a warranty so we could take it back if something got messed up. While we saved about $5-$6k vs. buying brand new, we spent a lot more than we originally intended.

Even though I backpedaled on some of my intentions when buying a new (used) car, there was absolutely one thing we stuck to:

We Paid in Cash*
Since I’ve bought the car I’ve been asked how much we put down, what our monthly payment is, and what’s the interest.

The answers? 100% down. $0/month. No interest whatsoever.

This apparently doesn’t happen that often in dealerships (or in general). The finance manager seemed pretty confused that I wasn’t financing the vehicle. He then probed a little bit into my finances in which I told him that yes we are debt free, had some money in investments, and would still have some money left over in our savings after buying the car. He seemed pretty impressed and responded “Wow, I hope to be debt free one day too!” He then proceeded to tell how I would be a lot better off financing and investing the difference in Google or Apple stock.

As he was giving me this advice, I wondered, “How much Google stock does this guy actually own?”

And more importantly, would I really want to listen to a finance guy who just told me he’d like to be in MY shoes eventually?

Who Needs a Car Payment?
I still don’t. Before my CRV died I would tell people that I planned to never have a car payment again. People looked at me like I was crazy.

We’re conditioned to think that car payments are a normal way of life. They don’t have to be. Financing a car hides the real cost of the vehicle as we’re trained to focus on affording the monthly payment rather than the total cost. Things like 0% APR and low monthly payments are just ways that dealerships get people to buy more expensive cars. Thank you marketing!

Car payments suck. Paying interest sucks. While Mr. Finance Manager guy at Toyota might be right when he said that I would be better off investing my money than paying in full, it’s not worth the risk. Even if we had less in savings, we would have purchased something cheaper and older rather than financing a vehicle.

Being in car debt for five or six years would take money away from more important things like retirement, investing, or Addie’s college fund. As someone who was recently unemployed, I know firsthand how quickly things can change in your financial situation. Having a $400+ payment looming over our heads for the next few years would be pretty crippling if something changes in our lives.

Our main goal was to find a car that we could truly afford, pay it off, and be done with it. While we took a huge chunk out of our emergency fund to pay for the car, it wasn’t completely depleted. With my new job and the fact that getting laid off has shown us that we can live way below our means, we’ll replenish our emergency fund soon enough 🙂

Still Not a Car Person
When we bought the car, I didn’t make a big fuss or post on Facebook a pic of our new ride in front of the dealership.

Would it even be cool to do that considering my car isn’t brand new? (Hey friends! Check out my preowned ride! It was a former loaner vehicle!)

I didn’t post anything on Facebook because I’m not THAT happy that we bought this car. (On social media I’m the annoying “look how cute my kid is” guy, not the “look at my new iPhone/TV/yacht” guy). This will always be a reminder that we dropped a lot of damn money on an expense that we weren’t anticipating. A few of our savings goals such as paying off our house and maxing our retirement have temporarily been paused while we rebuild our emergency fund.

Rocking out to Paula Pant and J$

As I’ve said before, I’m not a car person. Admittedly, it is kind of cool to have a newer vehicle that has a fancy backup camera and Bluetooth. But that coolness factor of having that shiny new toy faded real quick. The only thing I care about was that my daughter has something safer to ride in. I was more than happy to take my wife’s Hyundai and having the Camry become her daily driver. I sure as hell didn’t want to be the one to give that car its first ding!

Now let’s hope THIS CAR lasts 300,000 miles.

*PS – Vic paid $3000 on his Chase Sapphire card to score the sweet sign up bonus equivalent to about $625 in travel. He loves him some credit cards. If he could have he would have put the whole purchase on his card to reap even more credit card rewards. Sadly, $3000 was the max that Toyota would let him pay on credit.

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34 thoughts on “Our New (Used) Car”

Sharp looking car and I like the color. You made a great choice buying the used Toyota Camry. We have a Camry and love it! Buying used can definitely save a lot of money and where you chose a Camry, you won’t have to worry about too much depreciation. The maintenance should be low on it as well.

After working in the auto industry for 16 years, I’ve seen just about everything. Some of the things I’ve learned: 1) Never buy used from a private party. 2) When you buy used from a dealer, know that they almost always “pack” the car by at least $2k-$3k. In other words, start your negotiations by taking off at least that much and sometimes more depending on the model. 3) If you get a great price, know that the finance department will do their best at charging you high interest (they get a bonus) to make up for the loss. Don’t let them get away with it. Ask for the lowest “buy rate” if you need to finance it.

I give you a high five for doing ALL the right things. Enjoy your new ride! – Madison

It’s more or less general rule of mine because I’ve rarely seen private sales work out in the long run. Unless you are car savvy or take it to a trustworthy auto technician to be examined, it can be difficult to detect a maintenance nightmare and unfortunately, I’ve seen far too many private party sales end up in court battles with little or no recourse.

In my personal opinion, an exception to the rule would be if you know the car and where it’s coming from, and you are able to make a determination that the car was maintained properly. Maybe from family member or friend. I most certainly would not take a chance on purchasing a car from an unknown party. – Madison

Thanks for the tips Madison! I should have gone to you when I was looking! I think I might have played my cards tOo early as they knew early on that I was paying in full. Don’t know if that lowered my bargaining power. Oh wells, we got a decent deal on it with no car note so overall I’m satisfied 🙂

Good for you, being able to buy it outright!! I`m not a car person either, but my car is now 14 years old and definitely a consideration when I decide how to invest my money – happy for most of it to go somewhere longer term, for as long as I have enough to access instantly so I could pay in full for a new car, if I ever needed it

I believe it’s $95/year. All the good travel cards have a fee. The good thing with the Chase Sapphire is that it’s waived the first year. So if I don’t see much value in the card after the sign up bonus I’ll just cancel it before it renews. 🙂

Love your attitude about money and that you are taking charge of it rather than letting it control you. I drive an 11 year old camry that is dented in multiple places and have no intention of replacing it. 11 year old car equals no car payment, low insurance costs and peace of mind. Kudos to you and good luck with the new/used car.

Congrats on scoring some credit card rewards with your car purchase…I didn’t even know that was possible. Sorry to hear about the emergency fund hit but that’s incredible that you don’t have a car payment! Still going with “Smokey” for this one’s name? lol

So glad you pointed this out Vic. Car payments are the worst in my opinion. So glad you were able to buy it outright. Marketers have conditioned us if not careful to think in monthly payments, and they have done a great job of convincing the mass population to. Its great to see people going against the social norm. Who wants to be normal anyways? The car looks great. Great post!

Nice job Vic…As I am in the market for a new used car, I always line up my financing way ahead of time. I like the flexibility of having 0-1.9% financing and keeping the cash for other purposes. I also like to tell the dealership that I already have my financing lined up, but they can earn it after we agree on a price. I like to think of buying the car and financing the car as 2 separate transactions. Still driving an 01 and 03…just so hard to say good bye!

Everyone assumed that we would run out and buy a van after our third was born – he’s about to celebrate his first birthday and we still have our two paid-off cars, neither of which fit the whole family. We’re making do for now. While we will probably buy a van in the future, we are not going to run out and finance something just because it might be a little more convenient. We still have other debts to pay off and then we will save up to buy something with CASH. It feels great to not have any of those pesky car loans anymore; I refuse to go back 🙂

People questioned why I got a Camry instead of some big bulky SUV in the event that we have another child or need more space in general. I figure that we don’t need THAT much space on a normal basis and we could fit two carseats in there if needed. We could always borrow or rent an SUV if we went camping or something. I just didn’t want too spend TOO much on a bigger ride!

First, I think it’s AWESOME that you were able to pay cash for a car and collect travel points. What an awesome idea–will def keep this in mind. Second, it’s great you aren’t a new iPhone/yacht kind of person, either–who needs more stuff? 🙂 Here’s hoping your new ride lasts more than 300k miles!

Haha – Apple just announced their new iPhone SE and I instantly felt buyers remorse after buying a used iPhone 6 a month ago when my old 5s died. But I got a pretty decent deal on the 6 so I’m not gonna complain about it too much 🙂 Besides, phones haven’t really changed much since they went 4G/LTE right?

I would have loved to see that dealer finance manager pick his jaw up off the floor. 🙂 It was similar for us when we bought our Subaru (yes, we bought it new — I swear we ran the numbers and it really did make sense because used Subarus retain so much value — but not my point). 🙂 Point is: We also bought it outright, no financing. I was all ready to do a wire transfer from the dealer, had the bank on standby and everything, but then they said, “We can take a check.” A check! So I wrote them a check and they let me leave with a brand new car. I felt a little like I was getting away with something. 🙂 But that was after they made lots of comments like, “Really? You can just pay cash for it?” And even one rude comment suggesting that my dad must have been helping me out — do men get those kinds of comments, or only women? Anyway, totally agree with you — why take on any debt ever if you don’t need to?? That kind of pro-debt thinking is why we had the 2008 housing crisis and great recession!

Hey – if the numbers work for you, buy brand new! I bought brand new in the past when I bought a Honda Civic because those cars are pretty cheap so there wasn’t too much of a difference buying new vs. used.

I didn’t even think of wire transfer! I just brought a check. It took them a good 30 min or so for them to validate my account.

I think buying in cash just isn’t normal for those dealerships. They make most of their money financing, so if they can shame us into financing a little bit that’s more $$$ for them!

Yep – I’m very anti-debt! We had enough in our account to fund it so we took the plunge and cashed it out. I didn’t want to play the debt leverage game with a car.

I bought a used car and the sales guy was also confused as to how that was possible. He was like it must be nice to have that much in cash, blah blah and I don’t know why but I just lied and said I borrowed from my 401K so he wouldn’t pester me. And my co-workers are the same way so I just don’t mention whether I financed or not.